Czech Reservation Contract and Property Deposit: What Expats Need to Know

The reservation contract stage is where most foreign buyers in the Czech Republic make their first expensive mistake. You've found an apartment you want, the agent is pressing you to sign and pay the deposit quickly, and the reservation agreement lands in your email as a PDF — often in Czech.

Here's exactly what you're signing, what the deposit conditions need to say to protect you, and what agents legally can and cannot charge.

What the Reservation Agreement Does

The reservation agreement (rezervační smlouva) temporarily removes the property from the open market, typically for 30–60 days. During that window you're expected to:

• Secure mortgage financing (or confirm you're buying in cash)
• Instruct your lawyer to conduct due diligence on the Cadastral extract and SVJ finances
• Allow your lawyer to review or draft the purchase contract

In exchange, you pay a reservation fee — the záloha — typically 3–5% of the agreed purchase price. On a CZK 6 million apartment, that's CZK 180,000–300,000.

The Critical Structure: Two-Party vs Three-Party Agreements

This is the single most important thing to verify before signing.

Many agencies present reservation agreements signed only by the buyer and the agency — a two-party contract. The seller is not a signatory.

The Czech Supreme Court (judgment ref. 33 Cdo 3448/2012) ruled definitively that a two-party agreement cannot create a binding obligation on the buyer to conclude a purchase with the seller, who was never party to the contract. Penalty clauses requiring deposit forfeiture in a two-party reservation agreement are generally unenforceable.

What this means in practice: agencies who use two-party agreements know this case law but still use the format to pressure buyers psychologically into proceeding. The buyer thinks they've committed, when legally they often haven't — at least not in a way that allows the agency to keep their money.

A legally enforceable reservation agreement must be a tripartite contract: buyer, seller, AND agency all sign. If the agency sends you a two-party agreement, your lawyer should push back and insist on the seller's signature before any money changes hands.

What Exit Conditions Must Be in the Agreement

Regardless of whether you're presented with a two-party or three-party agreement, your lawyer must negotiate specific exit clauses that provide for full deposit refund if:

1. Mortgage financing falls through: Despite acting in good faith and applying promptly, the bank declines. This must be an explicit refund condition, not a clause that treats mortgage failure as the buyer's fault.

2. Material defects are discovered: Due diligence during the reservation period reveals issues not disclosed at signing — an encumbrance in Part C of the Cadastral extract, an SVJ with depleted reserves facing major repairs, or a structural defect revealed by inspection.

3. The seller cannot deliver clear title: If a Part C encumbrance (execution order, unresolved mortgage, third-party lien) cannot be cleared by the agreed date.

Blanket forfeiture clauses — "deposit is non-refundable under any circumstances" — appear in some agency contracts. They're routinely challenged in Czech courts as contrary to good morals and consumer protection principles, but the challenge process is time-consuming and costs money. Better to insist on proper exit conditions before signing.

Where the Deposit Money Goes

Under the 2020 Real Estate Brokerage Act (Zákon o realitním zprostředkování, Act No. 39/2020), agencies are legally prohibited from holding reservation deposits in their standard operational bank accounts. Deposits must be held in dedicated escrow accounts.

The agency may hold the deposit in:

• A dedicated client account at a bank (separate from operating funds)
• An attorney escrow account (advokátní úschova)
• A notarial escrow account (notářská úschova)

Ask the agency explicitly: "Where will the deposit be held and can you show me the escrow account details?" If they deflect or describe holding funds in their operating account, that's a red flag — and a legal violation of the 2020 Act.

Czech Real Estate Agent Fees in 2026

Czech agent commissions are set by market practice, not statutory law, and typically range from 3% to 5% of the purchase price plus VAT.

Who pays in Prague vs the regions:

• Prague: In the capital, commissions are almost universally absorbed by the seller and baked into the advertised price. The buyer nominally pays nothing directly — though of course the agent's fee is built into what you pay for the property.

• Regional markets (Brno, Ostrava, Pilsen): It remains common for the buyer to pay the commission as an additional cost on top of the agreed purchase price. On a CZK 5 million property at 4% commission, that's CZK 200,000 — a significant additional cost that needs to be factored into your budget.

The 2020 Act permits dual agency — the agent representing both buyer and seller — but requires full disclosure of this arrangement and the exact fee structure to both parties. If an agent tells you they represent "both sides," clarify immediately whether you are expected to pay a buyer's commission and what that amount is.

New builds: Developer sales typically don't involve a separate agency commission. The developer's own sales team handles the transaction and the price is all-in.

The Reservation Deposit vs the Pre-Contract Deposit

Be clear on the distinction:

• Reservation fee (rezervační záloha): Paid at the reservation agreement stage. Typically 3–5% of purchase price. Held by the agency in escrow.

• SOSBK down payment: In off-plan or new build transactions, a future purchase agreement (SOSBK) may require a larger staged payment. Developer SOSBK agreements often require 10–20% paid into developer escrow during construction. For new builds, insist these payments are held in bank escrow — not in the developer's operating account — to protect against insolvency.

What Happens to the Deposit at Completion

When the purchase completes, the reservation deposit is typically applied toward the purchase price. It's not an additional cost — it's a partial advance payment. The balance of the purchase price is deposited into the attorney or notarial escrow account and released to the seller only after the Cadastral registration confirms you as the new owner.

If the transaction falls through due to seller fault (they withdraw, can't deliver title, etc.), you're typically entitled to return of the deposit plus a penalty from the seller. If it falls through due to buyer fault without a valid exit clause, the deposit may be forfeited. The specifics depend entirely on the terms negotiated in the reservation agreement — which is exactly why having your lawyer review it before you sign matters.

For the complete transaction process from reservation through to key handover — including how attorney escrow works, the Cadastral registration timeline, and what happens during the 20-day plomba period — see the Czech Republic Expat Buying Guide.

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